A reader asked me if I am buying more shares of Wilmar as I said before that the time to buy is when the selling has dried up. Has the selling dried up?

Well, the trend is still obviously down and my investment is in the red. My long position in Wilmar is my biggest money losing investment on paper this year.

However, I have bought more shares of Wilmar as the MACD is rising while share price declined. Momentum is still negative but with a rising MACD, the negative momentum is weakening.

There is no obvious sign of accumulation or distribution with the OBV flat as the share price languished more or less at the 61.8% Fibo line.

Volume has been relatively low as the Bollinger bands begin to squeeze, confirming the picture of low volatility. A big move in Wilmar's share price could be on the horizon. Which direction? That is anybody's guess.

If the move is to the upside, overcoming the 20d MA on high volume would signal a breakout. If the move is to the downside, the low of $3.04 touched on 15 Aug is the support to watch.

A sign that things might have bottomed is when there is massive pessimism and no one is interested in buying anymore. In fact, there would be more who would sell even at a big loss because they believe the share price could move much lower over time. Then, there are the increasing number of "sell" calls by the research houses all offering much lower 12 months target prices.

The relatively low volumes, the gently rising MACD and the flat OBV tell me that there is currently a stalemate between the bulls and the bears, pending a possible big move in price with the constriction seen in the Bollinger bands. The trend is, however, still in the bears' favour.

Now, no one should tell you what you should do. You have to decide for yourself.

I know you do read analyst's reports (although following their calls is a different thing), so if everyone thinks Wilmar's shares will go lower than right now and China's equity market is currently really doing badly, ever thought of selling now and cut loss? And collect it cheaper when (not if) it drops below $3?It may not drop that low but, but very very probable.

For now. but with the economy in china not doing so hot now and Wilmar's immediate future being "challenging", wouldn't it take just another release of underachieving financials to send the prices further south? Many analysts are also talking abt its PE multiple being too high right now to justify for its poor profits.

Shares of Wilmar International jumped to the highest in more than two weeks after the palm oil firm launched its first-ever share buyback and the U.S. Federal Reserve stimulus sparked a rally in commodities stocks.

Wilmar said on Thursday it had repurchased 7.4 million shares from the open market, representing 0.115% of outstanding shares, at $3.00 each.

“The buyback is because Wilmar is good value at these prices. It also reflects the confidence that the Wilmar board has in the long term fundamentals and growth prospects of the group,” Wilmar’s spokeswoman said in an email.

Wilmar shares gained as much as 6.7% to $3.20 on Friday, the highest since Aug. 29. More than 34 million shares were traded, triple the average full-day volume over the past 30 days.

But Wilmar was still the worst performing stock on the Straits Times Index so far this year, down about 36 percent, partly due to concerns about weak crush margins in China.

“We believe Wilmar’s equity value will improve as battered margins in Chinese oilseeds processing slowly recover post two quarters of weakness,” Citigroup, which has a ’buy’ rating and S$4.08 target price on Wilmar, said in a report.

Citi said in the longer term, it believes that Wilmar’s scale as the leader in oilseeds processing and in consumer packs remains “best-in-class” and the company is likely to benefit from China’s growing deficit in soybeans.

Wisdom to tap on.

Disclaimer

The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.